Intel, the US semiconductor giant, is set to cut 15,000 jobs as part of an aggressive effort to revive its flagging manufacturing business and catch up in the competitive market for artificial intelligence (AI) chips.
Shares of the California-based company tumbled 20% to $29.05 in after-hours trading in New York after announcing a significant cost-cutting strategy and forecasting lower-than-expected revenue for the current quarter. Intel also announced it would suspend its dividend payments.
Intel’s workforce reduction, which accounts for 15% of its total workforce, is expected to be largely complete by the end of 2024. This move is part of a broader initiative to reduce operating costs and reduce capital expenditures by more than $10 billion by 2025.
Intel CEO Pat Gelsinger stated, “I need fewer people at headquarters, more people in the field supporting customers.”
Investor concerns about Intel’s position in the AI chip race have already led to a nearly 40% drop in the company’s stock value this year. The company is struggling with reduced demand for its traditional data center chips and increased competition in the PC market.
For the coming quarter, Intel expects revenue between $12.5 billion and $13.5 billion, significantly lower than the average analyst estimate of $14.35 billion, according to LSEG data.
Commenting on the dividend suspension, Gelsinger said: “Our goal is to restore the dividend and ensure that it is competitive over time. However, our current focus is on the balance sheet and deleveraging. We believe that deleveraging and capital investments deliver greater shareholder returns than dividend payments at this time.”